Performance Funding System

1. Performance Funding System Arkansas 2025

2. Background and Purpose • From the early 1990s to the present, Arkansas has experienced a more positive pattern of economic growth than the nation as a whole • Unfortunately, the state still lags significantly behind most SREB states and the nation in degree-holders • Jobs in the United States are projected to increase by 19 percent (1.1 million) by 2016 for people with associate degrees and by 17 percent for those with bachelor’s degrees. • In Arkansas, many first-generation students struggle to be successful. • While improving retention and graduation has always been a priority for Arkansas’s institutions of higher education, now is the time for state policy to zero in on degree completion.

3. Background and Purpose • For more than two decades, Arkansas policymakers have focused on increasing access to college and improving the state’s college-going rate • Formation of community college system in 1991 • Implemented Academic Challenge in 1991 • Governor’s Distinguished Scholarship in 1997 • Governor Beebe issued a challenge Jan. 11

4. Legislative Action • Senators Gilbert Baker and Johnny Key, and Representative Johnnie Roebuck sponsored Act 1203 of 2011 • An Act to Promote Accountability and Efficiency at State-Supported Institutions of Higher Education; To Clarify Funding Formula Calculations for State-Supported Institutions of Higher Education • Act 1203 was enacted by the Arkansas General Assembly by 100 percent of the voting members and signed into law by Gov. Beebe April 5

5. Current Status Assessments • From 2007-08 to 2008-09, Arkansas universities’ degrees and certificates conferred grew by 7.5% while the SREB average was 3.4% • From 2006-07 to 2008-09, Arkansas universities experienced a 10.5% increase in bachelor’s degrees conferred while the SREB states averaged 6.5% • Two-year colleges increased total degrees and certificates by 18.4% while the SREB average grew by only 3.9%

6. “The challenge before us when it comes to higher education is increasing productivity – graduating more students with the skills our states need with the resources we have.” ~ Governor Chris Gregoireof Washington, Chair of the National Governors Association Current Status Assessments • Without this sound foundation and commitment to growth, the goal of doubling the number of degrees which requires universities to increase the number of graduates each year by 4.7 percent might not be attainable.

7. Challenges • Strengthening the Arkansas Education Pipeline – The number of Arkansas residents who hold certificate, associate or bachelors’ degrees is below the national average, and an insufficient number of students attending two-year colleges pursue a bachelors’ degree • Increasing Retention, Graduation Rates – While the state’s college-going rate is at the national average, retention and graduation rates are below the national average

8. Work Group – Universities • Each meeting of the four-year performance work group was attended by approximately 40 or more individuals – presidents, chancellors, academic officers, fiscal officers, institutional research, and government relations personnel – representing all of the universities • Several of the meetings were attended by various staff members from ADHE, Governor’s Office, Bureau of Legislative Research, Dr. Olin Cook from the AHECB, Senator Sue Madison, and Representatives Jim Nickels and Tiffany Rogers

9. Guiding Principles for Funding • Increasing Credentials without Comprising Academic Rigor • While technical certificates and associate degrees are included, significant weighting is placed on increasing the number of bachelor’s degrees awarded. • The performance funding measures require all institutions be measured each year on total credentials awarded, bachelor credentials awarded, STEM production and student progression. • Forty percent of all performance funding will be allocated to these four measures, with the remainder on optional measures selected by each institution.

10. Guiding Principles for Funding • Missions, Role and Scope • The performance funding measures recognize the diversity of Arkansas’s universities, varying demographics, economic realities of their locale, as well as the academic unpreparedness of many of the students they serve. • Many of the optional measures are derived from Act 1203 and include underrepresented minorities, non-traditional, transfer and low-income graduates, as well as graduates with remedial needs and those in a high demand field or a critical need of a particular region of the state.

11. Guiding Principles for Funding • Improvement Begins at Home • The combination of mandatory and optional measures holds all institutions accountable for the major state goals outlined in Act 1203. • The measures also allow each institution to select optional goals based on mission, role and scope. • Each institution will be measured against its own progress and not against an arbitrary standard.

12. Guiding Principles for Funding • Need for Flexibility • Since the performance funding system will be implemented over an almost 15-year period, it must be organic and adaptable to changing national, state, regional and institutional needs. • Measures recognize that the performance record in the early years will almost certainly change over time and that it must be reviewed on an annual basis to assure the overall goal of doubling the number of graduates by 2025 is attainable.

13. Guiding Principles for Funding • Keeping it Simple • The measures must be simple, clear and understandable – mandatory and optional measures, with an adjustment for the percentage of undergraduate students receiving a Pell award. • Data-Driven Decision-making • Consistent with our two-year counterparts, the success of the performance funding measures will depend upon accurate and reliable data.

14. Development Process • In developing the model, the working group studied in great detail historical patterns of successful performance funding systems • In addition, the working group studied, in more detail, states where current systems are being developed • Tennessee • Pennsylvania • Ohio • Washington • Louisiana

15. Timeline, Brief Summary of Work Group Meetings – Universities • April 15 – AHECB meeting (presentation and discussion of Act 1203) • April 25 – ADHE meeting with all institutions (presentation and discussion of Act 1203) • May-June – Individual campus, system meetings to discuss implementation of Act 1203 • June 27 – Preliminary discussion of performance models • July 8 – Initial meeting of the four-year work group • July 20 – Discussion of performance funding models from PA, LA, WA, and TN based upon contact with representatives from those states • July 22 – Discussion of performance measures, as well as Compete to Complete from the National Governors Association and The Politics of Performance Funding in Eight States – Origins, Demise and Change from the Lumina Foundation • July 26 – Discussion of performance measures, in particular, how to address the progression of students (retention) which led to the appointment of Institutional Research personnel to create a model addressing the need to account for all students; discussion of rolling and baseline averages • July 29 – Discussion of performance measures recommended by institutions

16. Timeline, Brief Summary of Work Group Meetings – Universities • August 3 – Discussion of performance measures, in particular, which credentials and degrees to count, defining and determining progression, STEM, low-income, transfer and course completion • August 9 – Discussion of definitions ADHE prepared for each performance measure, in particular, how to define low-income and non-traditional students, appropriate STEM CIP codes, and three regional critical needs for each institution • August 23 & 30 – Continued discussion of the issues noted above and data analysis • September 7, 14, & 21 – Continued discussion of the issues noted above and data analysis • September 26 – Discussion and compilation of performance funding report • September 28 – Discussion of external grants and awards received measure, baseline year for credentials (2009-10), calculation of progression and STEM measures, and the importance of building upon the recent success in degree production of Arkansas’ colleges and universities (SREB) • October 4 – Presidents and chancellors approve the performance funding measures recommended by the work group for consideration by the AHECB • October 12 & 19 – Discussion and compilation of performance funding report

17. Mandatory Performance Measures

18. Optional Performance Measures

19. Optional Performance Measures

20. Compensatory Performance Measure

21. 10 Point Scale – Universities

22. Work Group – Two-Year Colleges • Considering unique characteristics of the community college mission and each individual institution, work group came to conclusions: • All serve academically under-prepared students who require remediation, additional student services support • All have a significant number of part-time and non-traditional students • All share goal of increasing course, credential completion • All have a significant population of low-income students

23. Guiding Principles for Funding Two-year colleges are open-door institutions that serve four major educational purposes: 1) Technical skills education 2) Preparation for transfer to a four-year university 3) Remedial education 4) Workforce training for business/industry A two-year college performance funding model must incorporate all four purposes

24. Guiding Principles for Funding • Emphasis on workforce training needs, transfer rates vary by region and must be taken into account • Enrollment changes attributed to re-training can impact data • Each institution must be able to calculate data and arrive at same numbers as ADHE

25. Timeline, Brief Summary of Work Group Meetings – Two-Year Colleges May 2011 • Presidents and Chancellors (Ps/Cs) have a conference call with Ron Abrams regarding Ohio’s performance funding model. July 2011 • Ps/Cs nominate personnel for a performance funding work group. The group includes a diverse skill-set including finance, research, student affairs, academic affairs and faculty. • An initial planning meeting is held to discuss strategy. The group identifies performance funding models from other states to research in-depth. States included Washington, Ohio, Tennessee, Pennsylvania, Indiana and Louisiana. Work group members volunteer to call representatives from each state. A conference call is held for members to report findings back to the group. • Tennessee and Ohio emerge as potential models for Arkansas and conference calls are arranged to have representatives from those states speak to the entire work group. • The work group meets with ADHE to discuss timeline and potential measures. • Work group members report regularly to Ps/Cs regarding progress.

26. Timeline, Brief Summary of Work Group Meetings – Two-Year Colleges August 2011 • Conference calls are held with the work group and representatives from Tennessee and Ohio. Based on discussions with Tennessee and Ohio, AATYC drafts measures and definitions for the work group to consider. • The work group meets in person one time and by conference call three times. • The work group meets with ADHE two times to discuss definitions and methodology. • Work group members report regularly to Ps/Cs regarding progress. • AATYC reports on progress of the work group to Ps/Cs and receive feedback. September 2011 • The work group meets independently and with ADHE to finalize recommendations. • AATYC holds a webinar for Ps/Cs to explain in detail the recommendations of the work group. Ps/Cs are asked to review the recommendations and to be prepared to make decisions and vote in two weeks. • Ps/Cs meet Sept. 22 to review and vote on recommendations. Ps/Cs break into four groups by region. Information is presented in stages and is discussed first in small groups. Small groups report out to entire group. Ps/Cs vote individually on each issue. • AATYC makes revisions and distributes the final performance funding model to Ps/Cs, the work group and ADHE.

27. Mandatory Measures

28. Mandatory Compensatory Measures

29. Optional Measures

30. Points Scale – Two-Year Colleges • Under development

31. Sustainability and Maintenance • The system is designed to assist Arkansans to success in higher education goals and reach the goal of doubling the number of degree-holders by 2025 • Future employment opportunities and needs will continue to grow, change and develop • It’s not a “one and done” model, as it must be continually monitored to assure its effectively serving students • Will help more students prepare for increasingly sophisticated, technologically-demanding jobs • Designed to encourage campuses to continually improve academic, support programs

32. Sustainability and Maintenance • A standing committee will report annually and make recommendations for modifications for next year’s funding. • Each year’s evaluation will focus on the previous year’s results in each of the measures and in the overall growth of graduates. • Changes may be needed in the scales attached to each measure, weighting of various measures, funding distribution and even the measures themselves. • Careful monitoring, updating and improvement will ensure each institution receives appropriate, adequate funding to fulfill its mission.

33. Sustainability and Maintenance • Standing committee will review, analyze data to set performance targets for institutions which would serve as the benchmark for an institution’s continued performance. • An institution that attains or maintains the target on any measure will receive points comparable to those allocated for improvement.   • Ongoing evaluation will be empirically-based and assure that timely modifications are made.

34. Preserving Academic Integrity • Doubling number of degrees can not come at expense of academic standards, quality • Role of faculty will be essential to success and fostering high-quality learning environments • Mentoring, advising, rigor • Student development support, retention initiativesoutside the classroom

35. Measures of Quality • Maintenance of regional accreditation by each institution. • Maintenance of regionally and nationally accredited academic programs. • Monitoring the percentage of students who graduate from accredited programs. • Monitoring the number of students who transfer from two-year to four-year institutions • Monitoring student performance on professional licensure exams. • Monitoring the percentage of students who matriculate into graduate programs after receiving their baccalaureate degree.

36. Measures of Quality • Reviewing institutional reporting of data detailing its assessment of student learning outcomes. • Compiling and publishing the results of state-mandated program reviews by ADHE on an annual basis. • Analyzing and reviewing the placement rates of graduates in the marketplace. • Enhancing the presence of quality academic support programs designed to develop students academically and subsequently to enhance their performance in the classroom. • Monitoring the increases in the number of degrees awarded to ensure growth is occurring over a range of CIP codes unless such growth is focused on CIP codes in the STEM or High Demand areas.

37. Performance Funding System Next Steps